Any way you cut it, employers appear to save if Medicare adopts drug benefit

There has been a gradual decline in employer-sponsored retiree health benefits for much of the last decade; notably, fewer retirees are offered coverage for prescription drugs. A new analysis suggests that a prescription drug benefit in Medicare would reduce employer expense for health coverage — which, in turn, could encourage more employers to offer some form of drug coverage and thus reverse this erosion. The analysis found that under either of the two basic coverage proposals — a direct expansion of Medicare to include prescription benefits or optional drug coverage — employers would save money, regardless of whether they continue to pay for drug coverage, supplement the core Medicare benefit, or drop coverage altogether.

Projected employer savings under a direct expansion of Medicare

Employers who...

Estimated savings*

...retain current level of drug coverage by paying all pharmacy expenses, then take government subsidy for providing coverage